The Hindu Business Line : Shanthi Gears witnesses frenzied trading

Coimbatore, Aug 8 The Shanthi Gears Ltd counter witnessed frenzied trading in the National Stock Exchange on Friday following media speculation that the wind energy major Suzlon Energy Ltd is looking to buy out the promoter’s stake in the company.

The stock witnessed a trading volume of about 9.61 lakh shares on the NSE; it opened at Rs 69 (face value Re 1) as against the previous day’s closing price of Rs 67.45 and touched a high of Rs 80.95 before closing at Rs 73.90.

But company sources told Business Line that Ernst & Young, which has been mandated to identify a technology partner, was yet to come back with possible names in this regard.

In an official communication to the NSE later in the day, Shanthi Gears denied that it has taken any decision or signed agreement with Suzlon for any stake sale.

Windmill foray

Shanthi Gears, the Coimbatore-based company engaged in the manufacture of industrial gears, has forayed into the manufacture of gearboxes used in windmills. According to Shanthi Gears’ sources, the gearboxes currently manufactured by the company were small. The contribution of windmill gearboxes to the overall turnover of the company was just about 3 per cent — around Rs 7.5 crore out of the total turnover of nearly Rs 250 crore last year.

These gearboxes met the requirements of both domestic and international markets.

The sources said the company was interested in scaling up the production of gearboxes not only in terms of number but also in terms of their capacity.

For this it needed technology. There was good potential for this product line and Shanthi Gears was interested in tapping this segment.

It was stated that the mandate to Ernst & Young was to find a suitable technology partner and the consultant was yet to get back with possible names. Even if any equity dilution or preferential offer is considered, it would be for a minority stake in the company and the stage for such consideration has not been reached and no names of technology provider has been short-listed, the sources added.

Holdings, tradings

The family of the promoters, including Mr P. Subramaniam, Managing Director and the promoter of the group, holds 44.70 per cent of the equity share capital as at the end of June 30, 2008. The share capital of the company is Rs 8.17 crore.

During 07-08, SGL registered a turnover of Rs 244.13 crore and the net profit was Rs 44.16 crore. The earning per share was Rs 5.40.